Global Crossing announces 2002 milestones, 2003 outlook - Business

Global Crossing announced that it reached several significant corporate milestones in 2002 and is poised to capture market share as it finalizes its restructuring and emerges as a revitalized, healthy business. Global Crossing reported achieving key financial, operational, network, customer and service milestones, while offering an outlook for 2003.

Global Crossing's makeover has been marked by a greatly improved financial performance in a difficult environment. Global Crossing met performance targets in 2002 for cash in bank accounts, Service Revenue, Service EBITDA and maintenance and operating expenses. The performance targets were established for Global Crossing (excluding Asia Global Crossing) in the operating plan presented to its creditors in March 2002. These financial results are preliminary and unaudited.
Achievements include:

- A healthy cash position throughout 2002. Global Crossing ended the year with $782 million of cash in bank accounts, well above the $611 million targeted in its operating plan. Approximately $393 million of the December2002 cash in bank accounts was unrestricted cash.

- Service Revenue of $2,878 million in 2002, $160 million over the operating plan.

- Service EBITDA for 2002 at $(243) million, an improvement of $12 million on the operating plan.

- Operating expenses, including third-party maintenance costs, of $1,074 million for the year, an improvement of $8 million relative to operating plan targets.
- A significant reduction in operating expenses, excluding third party maintenance, from an estimated $1.5 billion in 2001 to $916 million in 2002.

- An even more dramatic reduction in cash paid for capital expenses, from approximately $3.2 billion spent in 2001 to an estimated $89 million for new commitments in 2002.

- Workforce reductions in 2002 that saved Global Crossing an estimated $215 million in payroll. Global Crossing ended the year with approximately 4,300 employees, compared to approximately 8,000 employees in January 2002.

- Closure and consolidation of 279 facilities during the year, shedding more than four million square feet for an annualized cost savings of $130 million.

Key 2002 network milestones include:

- Network availability remained at 99.999 percent, the highest industry standard.

- Global Crossing's VoIP (Voice over IP) platform, considered the largest in the world, steadily broke its own records, carrying a total of 8.2 billion minutes for the year.

- The amount of traffic running over Global Crossing's IP network, excluding VoIP, grew 200 percent for the year.

- IP traffic volume increased from 10 Gbps to 30 Gbps.

- Global Crossing helped set a new Internet speed record by transferring 625 Mbps of data 7,800 miles in 13 seconds - 7,000 times fast than dial-up - in May 2002.

- Global Crossing's advanced network enables customers in Europe, Asia and North America to implement IPv6, the next generation of IP protocol.

- Global Crossing was ranked among the industry's most innovative IT users by InformationWeek magazine.

Global Crossing focused on customer retention throughout 2002, while bringing new customers onto the network. In 2002, Global Crossing served more than 75,000 customers worldwide, including approximately 40 percent of Fortune 1,000 companies, and the majority of the world's largest telecommunications camers. Six thousand of those customers engaged Global Crossing for IP services.

2003 Outlook

Having successfully met many challenges in 2002, Global Crossing is now firmly focused on emerging from bankruptcy, growing its business and increasing revenues while sticking to its newly streamlined cost structure, and continuing to leverage its next-generation global network. Upon emergence, Global Crossing will have a substantially reduced long-term debt load.

Sorrento Launches Restructuring

Sorrento Networks, supplier of intelligent optical networking solutions for metro and regional applications, announced the execution of the definitive restructuring agreement with its convertible debenture holders and the Series A preferred stockholders of its optical networking subsidiary, Sorrento Networks Inc. (SNI). The Company also announced that it filed a preliminary proxy statement with the Securities and Exchange Commission (SEC) for shareholder approval of the capital restructuring, its reincorporation as a Delaware corporation, and anew employee equity incentive plan.

Highlights of the Definitive Agreement

The terms of the definitive agreement with the debenture and Series A holders are substantially similar to the terms previously announced by the Company in December 2002. The Company's $32.2 million in convertible bonds will be converted into common shares of the Company and into a portion of $12.5 million in secured convertible debentures that pay interest of 7.5% per annum and mature in August 2007. In addition, all Series A preferred shares will be converted into common shares of the Company and into a portion of the $12.5 million in secured convertible debentures. The outstanding Series A "put" of $48.8 million against SNI will be withdrawn. Certain Series A preferred stockholders will also receive a total of $600,000 in additional convertible debentures to pay certain legal fees.